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- Title
DOES MARKET EXPERIENCE ELIMINATE MARKET ANOMALIES?
- Authors
List, John A.
- Abstract
This study examines individual behavior in two well-functioning marketplaces to investigate whether market experience eliminates the endowment effect. Field evidence from both markets suggests that individual behavior converges to the neoclassical prediction as market experience increases. In an experimental test of whether these observations are due to treatment (market experience) or selection (e.g., static preferences), I find that market experience plays a significant role in eliminating the endowment effect. I also find that these results are robust to institutional change and extend beyond the two marketplaces studied. Overall, this study provides strong evidence that market experience eliminates an important market anomaly.
- Subjects
MARKETS; BEHAVIOR; ECONOMICS; ENDOWMENTS; MARKETPLACES; CHARITABLE uses, trusts, &; foundations
- Publication
Quarterly Journal of Economics, 2003, Vol 118, Issue 1, p41
- ISSN
0033-5533
- Publication type
Article
- DOI
10.1162/00335530360535144